Business Processes Re-engineering

When a business grows and adapts it often requires a lot of overhauls, both physically and digitally. Processes that previously worked or were effective for purpose are no longer so. Because of this a business will re-engineer part of its business processes to adapt.

Reasons Why a Business May Adapt its Processes

A business may change the way it functions for many reasons,

  • The business is expanding and it’s old process needs to handle the additional capacity or machinery.
  • The function the old system used to serve has been superseded or removed from the business process as it is no longer required.
  • The business is being merged or acquired by another and duplicate processes need to be removed or increased and vice versa.
  • The process currently being used is not dynamic enough to be useful anymore or is causing issues.
  • A process is failing or is not always effective.
  • The current process has too many avoidable errors.

Reasons Why a Process May Need Changing

A business may change it’s processes for many reasons, such as ; –

  • Improve the speed of operation.
  • Improve the customization or dynamic of a process.
  • Improve the continuity or compatibility to connect the process to other processes.
  • As a reaction to changing legislation, laws or consumer complaints.
  • Improve the efficiency of a process.
  • Improve the operating cost of a process.
  • Improve the output or capacity of a process.
  • Improve the working capital investment in a process.
  • Improve quality of a product.
  • Change the product.

Re-engineering a process not only requires identifying a change but enacting that change can take a lot of steps to complete, especially for products in areas that are heavily reliant on compliance and conformity, such as electrical appliances or medial tools.

Improving Efficiency Caveats

Changing a business process can be risky and should have appropriate risk analysis in place where processes are crucial to the business process or jobs.

Many businesses re-engineer their processes simply to ensure that their product or products match demand. Overhauling business processes may not be financially viable if the number of defects or failing products outweighs the cost of replacing the machinery or software process.

Improving the speed of a process may make the process faster but the business may also want to change the system implemented, such as using a batch process system where the job can be completed as part of a ‘batch’. Having many batches however can lead to greater working capital on complex components or products and can mean that if there is a problem with one then it is likely that the whole batch is also going to fail. Batch processing can also make quality control and quality assurance much harder and more expensive to enact.

Kanban Systems in Lean Manufacture

Kanban systems in business allows them to effectively manage their stock internally, essentially for businesses that require large amounts of stock, such as small parts, screws or trolley-based workstations, they will likely use a Kanban system to effectively manage their stock. A typical Kanban asset tag will have the item description, part number and sometimes will include the cost of the unit, should the business want to try to regulate the use of the item.

What is the purpose of Kanban?

  • A Kanban system ensures that employees always have access to the tools they need and JIT systems can be implemented easily.
  • A Kanban system also allows a business to measure the amount of parts that they do not use when producing a product, and may be able to go to a smaller or higher quantity when ordering.
  • The tag system can also work with a three bin system, one on the factory floor, one in the re-stock room, and one at the supplier. This ensures that the bins are always stocked.
  • This system can also link in with other elements of lean production.
  • Defective products never make it to factory floor as they would not be stocked by the stock control system.
  • Some implementations have plates with the items needed laid out so workers can simply pick up the tools they need and assemble to product without having to move or find the item.
  • Some implementations also have the production line move along at the pace of the ordered quantity, making staff work harder to keep up with the product. (usually for production lines like planes or cars)

Kanban Asset Tag

kanban card system

Some businesses use the Average cost per unit to judge their effectiveness and efficiency, as Kaizen systems recommend ‘Continuous Improvement’ the average cost per unit provides a metric for them to calculate if they are more or less efficient.

Total production costs in period / Total output in period (units) = Average cost per unit

The rise of E-commerce (electronic commerce) and M-commerce (mobile commerce) has made the re-ordering process of these parts much more accessible for a company.